Well I finally finished my taxes for the year. I am always a bit surprised when I do them at two things – first how much we pay in aggregate taxes each year (somewhere near 40-50% when you add in federal, state, real estate, sales, excise, etc.) and second, how complicated it is. I use software, but it usually takes several hours to navigate through and in the end my federal return was 39 pages long this year! It also makes me feel very frustrated when all you hear government talk about (at least in the communist Northeast) is how we need to raise the revenue (note they don’t say taxes). They always forget that you can always decrease your costs, but that never seems to enter their minds. So once again, we are looking at more tax increases in the Northeast. While I don’t mind paying my fair share, I do mind paying my share to support things that should be cut or curtailed in this environment. This is where I am surprised, shocked and a bit embarrassed that I agree with the crazy Tea Partiers on an issue… Finally, I really like the Mormon flat tax – 10% from everybody, no deductions, alterations, etc. It is simple, clean and I don’t have to fill out 39 pages to get the answer. Seems we COULD teach the Government a thing or two in this area.

I too am a fan of the idea of a flat tax. Here are my questions? At a federal level, what would it have to be to support a reasonable level of spending? Since a flat tax is highly regressive, how would you phase it in? Would you apply it to corporations as well? Do you offer any deductions/credits, including mortgage deduction?

#3 “Ron, It takes a larger amount of money needed for basic necessities from the poor, rather than from those who have a greater ability to pay their taxes from disposable income.”

Most flat tax proposals I’ve seen address the regressivity objection by allowing each taxpayer a certain floor amount of income before the tax kicks in. This is meant to take the place of the dependent deductions and credits that jks mentioned.

As someone with a CPA background, I’m sympathetic to the flat tax. However, I think the crowd that claims its advent will abolish the IRS is badly overstating the case. Any government that taxes something as private as someone’s “income from any source derived” is going to need a robust enforcement mechanism to ferret out the cheats.

National sales taxes or VAT taxes have the appeal of broadening the tax base while encouraging saving/investment. But I would never support them unless their implementation was coupled with the repeal of the 16th Amendment authorizing the income tax. Silly me, but I can’t see myself exactly trusting Congress when it promises us all that we’ll nevvveerrrr wind up with both kinds of taxes at the same time. Cynical me!

The biggest problem I see with the Fair Tax lies in switching over to the new system. The current system taxes people on earnings, meaning any money they have has already been taxed. The Fair Tax is a consumption tax. If we switch over, then everybody who has saved money, and been taxed on that money, will be taxed again when they spend it.

The second problem I see has been mentioned: the government loses a lot of its ability to influence or control behavior. Like child tax credits, etc.

A third problem I see, though I’m no economist, is that it would discourage buying stuff, which would hinder growth of the economy. I wonder what economists think about this, whether this would be the case or not.

1. Kari – I don’t know the details that would work but I think you have to keep it simple or in no time you are back to 39 pages…

5. jks – well if you live in the Northeast, we pay 6% SS, 4-5% of our homes value each year in property tax (which works out to 5-8% of our income), 2-3% of our cars value each year in tax, 6% sales tax, state tax works out to somewhere around 6% a year after deduction, federal then wallops you because you pay too much in taxes elsewhere you then get to pay AMT and voila you pay 40-50% in taxes…

6. bjohnson – VAT – yep in the EU VAT is in the 20% range and they get to pay income tax. I agree if we do a consumption tax, keep it as the only tax…

7. Matthew Chapman – thanks for your obvious comments, I am not inferring that all Mormons pay it, nor that it is consistently paid, but that it is simple – it does not take 39 pages to figure out…

8. buraianto – my response is that I don’t want the Government regulating behavior via taxes. Do I really have another child because I get a tax break? If I do, I am an idiot

In the immortal words of Leona Helmsley, “we (the rich) don’t pay taxes only the little people do.” I’m sorry anyone thinks one could get a fair tax out of a House controlled by the current Republicans, as they want to lower taxes for the wealthy and cut programs that benefit the poor and middle class. If you have such faith, Ive got a bridge to sell you in an eastern city where the Dogers used to play. The U.S. Senate? 2/3 of its members are millionaires as well as nearly all require large political contributions of wealthy corporations.

Every time a proposal for a flat tax has been proposed certain exclusions seem to be added. For example, Steve Forbes wanted to exclude capital gains . Others proposed adding business profits paid as wages to the excluded list. The Gucci Gulchers from K street would have a field day collecting for all the lttle “exemptions” and “credits” they could get through Congress.

United States government spending at all levels is currently about 40% of GDP. About 30% of GDP is being collected in taxes.

30% of GDP in taxes doesn’t get collected unless total taxes (including hidden and indirect taxes) average about the same amount – 30% per household.

However, since most income taxes (other than the payroll tax) are substantially collected from those with above average incomes, the direct and indirect taxes on the median household are probably something more like 20%. If you get a little wealthier than that, they go up in a hurry.

The problem of course is the other 10% of GDP that the government is spending that the government is not bothering to collect this year, next year, or anytime in the near future by all indications. Not a good sign.

Let’s remember, businesses don’t pay taxes, they pass them on to us in the form of higher prices. So by all means increase the taxes on the small business owner. She will just have to increase prices, lay someone off, or go out of business. But then again those rich business men deserve it don’t they.

10. Stan Beale – I am not sure we will ever have a “fair” tax code – not even sure how one defines fair as my view is different from yours and so forth

11. Mark D. – wish I could spend like that every year with no apparent consequences

12. Kramer – Not sure what you mean by this. Business do pay tax and if it is 35% of profits, they don’t raise prices that much. They usually raise prices due to increase in what they pay for what they sell.

Well, how about we allow that people need a certain amount to live…..like $75,000 and those people pay no taxes and tax everything over that at 10%? That makes sense to me. Businesses do pay taxes but if we tax them to extinction, none of us will have any money.

I like my idea.

Me and Bill had to pay something like $5000 last year–can’t remember what–and my daughter in law, who didn’t even work, got $10000 BACK! This year, even though we modified our W-4’s we are still paying over $2000 (now that’s on TOP of what was deducted from our checks every month) and our daughter-in-law, who worked uh, about 6 months, received a $7000 refund. Which she promptly blew. Something is very rotten in Denmark.

11. The answer is not to fund that 10%, it is to try and not spend that 10% The problem arises because people like #10 get all up in arms about the federal government cutting funding for things it has no business funding in the first place. Clearly Stan believes that allowing Mrs. Helmsley to keep the same percentage of her hard earned money as I do is somehow a bad thing. Because clearly Leona will only spend that extra money on flyaways to the Hamptons and new jewelry. Never mind the fact that when she spends her money, she allows a business owner to make money which he can then use to hire another employee who can then feed his family.
When are the commies going to agree that it’s not actually fair to confiscate a higher percentage of someone’s income just because their income is higher? Then again, if they agreed then they wouldn’t be commies.

12 I totally agree with your first sentence. I hope the rest is snark.

13. Devyn
They do pay 35% of profits but it make sense as a business owner to try and squeeze an extra 35% in to my profit margin.

“A third problem I see, though I’m no economist, is that it would discourage buying stuff, which would hinder growth of the economy. I wonder what economists think about this, whether this would be the case or not.”

Yes, taxes distort consumption. However, a switch from an income tax and a national sales tax would probably be a wash, since you no longer have payroll witholdings. Your monthly income increases (which might increase your overall consumption), while the taxes paid on goods consumed increases (which might bring consumption back to income tax levels). So in essence, if the powers that be might be able to chose a sales tax rate which keeps your spending habits constant, but allows for a fixed percentage of GDP to be received as tax revenue.

As to the regressivity of a flat tax, one could always tax classes of goods at different rates. Basic grocery items get taxed at a lower percentage, and so on. But I agree that if a transition to a national sales tax were to happen, it needs to be accompanied by a repeal of the 16th Amendment.

While the corporate tax rate may be 35%, the average corporation actually pays something like 16% and big corporations like GE end up paying 0%. They actually make billions of dollars a year and pay exactly $0 in taxes.

“It also makes me feel very frustrated when all you hear government talk about (at least in the communist Northeast) is how we need to raise the revenue (note they don’t say taxes). They always forget that you can always decrease your costs, but that never seems to enter their minds.”

Every discussion I have heard about our budget problems, from both the right and the left, confronts both spending and revenue, I’m not sure where you have missed this. Everyone actually seems to agree that costs need to be cut, but there is an honest disagreement about whether taxes need to be raised on the wealthy. If we want more balanced budgets both spending and revenue (taxes!) will have to be addressed.

I think I am pretty much opposed to the flat tax. I think its really regressive. I agree with a progressive tax system. The only debate for me right now is what should the top tax rate be? I think it should be kept low like 28%.

I also think that SS faces such huge problems that the country should probably look at raising the income level at which you stop paying into SS. Like 200K or so instead of the 100K it is now. Or means test SS. Or we could have more babies which is really the problem with SS.

Devyn, in general I agree with you regarding the government controlling behavior via taxes. I guess I didn’t specify what I meant by problem, but on this point I think the Fair Tax has a problem because the government is the organization that has to enact the Fair Tax. Since it would be giving up a lot of power I think the Fair Tax would have a hard time getting enacted.

The rich not only don’t pay taxes, they (and some parts of the middle class) also get their tithing subsidized by the federal government by avoiding taxes on capital gains by donating to the church as tithing investments that have increases over their basis.

The rich have both the incentive and resources to avoid taxes in ways that are perfectly legal which all work to give them a lower tax rate. The most obvious means is to generate a healthy portion of one’s income in long-term capital gains which are currently taxes at 15%. For a point of comparison, someone with an income more than $34,837 in 2010 has a marginal tax rate of at least 25%.

For more on who pays more taxes, I refer you to the parable of the widow and the mite as a means of thinking about the utility of the last dollar the rich and the poor give to the government.

I love the idea of a flat tax. Every one pays, every one is invested. Exemptions for food and some housing costs. No 39 ridiculous pages. I also agree that government spending at it’s current level is unsustainable and MUST be cut. Military, transportation, education, entitlements; it all has to be considered. The liberals squawking for more revenue- do you think they will ever be happy? I make hard choices and pass on some things I think i need, so should the government. If we all used our resources with the same reckless extravagance as our gov does we’d be broke by next week.

Mark D. You must really hate families with kids. Since it’s the kids that prevented us from being taxpayers this year (well, maybe the make work pay credit did it). Yes, we got bumped down to non taxpayers (for only the third year of our lives ever and I’m 40). This recession meant a job loss and a new job with less pay.
If it is any consolation, I hate the 401K because I know we’ll be paying in a higher tax bracket when we withdraw that money but we have to go for the match (even though its like Enron and the match is in company stock).
That’s ok. We don’t need a decent birthrate. Tax families with kids 10% plus social security and expect them to pay $7000/her for health insurance plus their mortgage and buy food. No problem.
I actually wouldn’t mind chipping in for infrastructure. I’d like my kids to be in a country with safe roads, clean water, and decent power girds. Government should do things like that. But, unfortunately, social programs are sexier.

No one seems to have addressed the fact that a flat income tax wouldn’t really be that much less complicated, because a large portion of that 39 pages mentioned in the OP is taken up just calculating what your income actually is! Most people earn money from more than just their job–we get income from a multitude of places and that is why calculating your adjusted gross income takes up about 30 of those 39 pages. Sure, you could then exclude all the deductions to taxes, but you wouldn’t save that much hassle, really. IMHO, anyway.

We don’t have a Mormon Flat Tax, we have a progressive tax. We have been counseled and commanded in General Conference talks by the current and past four Church Presidents at least (not just Apostles or GAs in general) to specifically give very generously in Fast Offerings, Humanitarian Relief, the Perpetual Education Fund, the Book of Mormon Fund, the Temple Fund, etc. These Presidents have explicitly stated that as one’s income goes up the level of contributions should go up *faster*, i.e., the exact definition of a progressive tax. They have said to donate much more than is *required* if we area at all able to do so.

RE: #16 “When are the commies going to agree that it’s not actually fair to confiscate a higher percentage of someone’s income just because their income is higher? Then again, if they agreed then they wouldn’t be commies.”

The Benefits Received principle of taxation strongly suggests those earning/making higher incomes should pay a higher percentage because the institutions of society benefit them much more. Think about the following services/items as examples:
1. Police protection; the benefit received by the owner of a million dollar home, multiple million dollar business, etc. is substantially greater than that received by the low income renter.
2. Roads, airports, ports, railroads; most businesses either deliver products or receive inputs via the transportation system. They would cease to exist without it.
3. The court system; again having the ability to enforce your contracts benefits the business owner much more directly than the “average” citizen.
4. The military; what is the value of what they are protecting?
The list goes on and on. The rich should pay substantially more because they benefit from government substantially more.

To summarize: “Taxes, after all, are the dues that we pay for the privileges of membership in an organized society.” President Franklin Delano Roosevelt

It’s a very bad idea as far as I’m concerned. 10% affects someone alot more at the bottom end of the pay scale, than some else at the top end. That’s when people get divorce they should never say They’ll go have on expenses. Depending on what one makes half is more for some than others.

32. John Harvey – sort of, but do I really believe that any wealthy Mormon is donating more than 15% of their income to the Church? No

33. John Harvey – This does not make much sense. I think that the wealthy should pay more because they are blessed but your arguments are nonsensical. I could make the same arguments for a poor person or a retired person or for a criminal, etc…

34. diane – yes and no. It would balance things significantly and if you have a threshold (say $40K) where you had to make that much money to pay any taxes, it would account for what you mention.

John, in each of those cases, you are claiming they receive more benefit. But you forget they would also pay many times more in taxes than a lower income person. So if I pay 40k in taxes and you pay 4k in taxes, I have indeed paid more for the greater benefit I have received.

Diane, if 10% affects someone a lot more at the bottom end than the top end, do you believe the Lord was unjust in declaring tithes at 10%?

Well, let’s look at this way, I’m on disability which amounts to 966.00. a tithing of 10% is 96.00 calculate rent at 174.00 gas bill of $50.00-$176.00(for colder weather)health insurance (15.00) medication of which 1 are medically necessary because I’ll bleed out if I don’t have it(50) doesn’t leave much for food.

So, my answer to you yes, its’ wrong to make people like me to pay 10%. And I also say yes, its’ wrong because with all the money I have paid in tithing, when ever I have asked for help, I was denied, so I’d like to know where all the tithing money I’ve paid has gone to. The talks about how tithing money is suppose to help the widows,the poor, the sick, just didn’t, and quite honestly, doesn’t jive with me. This is one of the many reasons why I had my name removed from the church

35 re 33. Exactly right. The notion that people of higher income benefit out of proportion to the taxes they contribute compared with lower income people is a little hard to swallow. Though by no means upper income, I’ve worked hard, I’ve taken risks, and I’ve sacrificed a lot of indulgences and spent an extra 11 years in school to achieve my goals. I employ 7 people, I drive less than most people, the police have never been to my house. I have 1 child in public school. I buy my own cheese. The percentage of my income that goes to taxes is in the low 40’s. I can tell you that the police, schools and courts keep themselves plenty busy “serving” some of the low income renters John Harvey references. How is it again that I benefit more from government services more than I deserve? By the way, John Harvey, The FDR quote if anything argues against your position.
37. Diane. So sorry that you feel poorly served by the church. I hope things get better soon.

@38) Just one thought for you, poor people work just as hard as you do, yet they invariably are taxed more and it is much harder to pull your self out to even a middle class standard of living when you are really just worried about the day to day

Diane-
This is much more complex than the tired populist rich vs poor debate, and presenting it as such skirts the issue. I grew up poor, by the way, so I’m not unfamiliar with the concept. Our society, above all, needs to care for those genuinely in need. My experience, however, in 20 years of close association with entitlement programs is that far too much resource is diverted away from the disabled and the deserving to the disinclined. As for “invariably taxed more”- I would love to see the data on that.

I never said, it was a populist issue, It’s just that when people say things, like,”I’ve worked hard , taken risk, yada, yada, there’s an underlying implication that poor people don’t work just as hard. Poor people aren’t willing to take risk, And while you may have grown up poor, now that your successful, came across as being elitist. Just saying, I don’t know you personally, so I don’t know this to be the case, but that’s how it came across to me.

Diane- Clearly you have an agenda born of hard experiences. The assertion made by john henry, if you’ll go to the bother of reviewing, was that since higher earners benefit more from government assistance than lower earners They deserve to pay a higher proportion of their incomes to offset the costs of those programs. I’m simply disagreeing with that by pointing out that like most people, the abilities I have came from working hard, sacrifice, and a willingness to personally bear financial risk, not from disproportionate governmental assistance. You are the one that started this ridiculous “poor people work as hard as rich people” thing. No one has said, and I’m certainly not one who believes otherwise.

You know, Diane, maybe you could pay like, $5. It’s between you and God what is a full tithing. It’s probably moot at this point and I can see that we put a lot of pressure on each other—hell, ourselves!–but the amount isn’t really God’s concern. That’s what I think, anyway. I do think that tithing is an important concept no matter what religion you are. Tithing your increase, which in your case might be zero, might just mean giving service in some way known only to you and God. And when you’re asked, you say yeah, I paid a full tithe. I think we get caught in so much small stuff.

Ultimately, barring extreme circumstances like you desscribe, paying tithing is a privilege. It’s part of giving back because certainly we are all blessed in some way. Even losers like me.

Sorry to be the bearer of bad news, but, I don’t have any hidden agenda, I just expressed how your post came across. I even stated in the post that I didn’t know if you are an elitist or not. And, I was never disrespectful in my tone as you have been. You have not only been negative, but dismissive in tone to anything I have posted simply because I have disagreed with what you have posted.. My original response, if you had bothered to check(see what I mean) was in response to Devyn St question, You responded by telling how wrong in thought I am to make this simply about rich vr poor.

You are not a loser. And even though I’m no longer a member, I still share what I have, even if it means sharing a meal with someone that doesn’t have, because that’s just my personality.n But sharing food isn’t the only thing, either, but its basic

oh, loser’s a stupid way to put it. I just meant that, even though I’ve got some problems, I still have something to give. And so do you. You could tithe what you can give. However, it’s moot. Have you checked out John Dehlin’s site yet? He did a wonderful post on staying a member even when you’re disillusioned. Can’t think of the name.

I didn’t get the same point from bearbait’s response to your post. I don’t know from populist, and I don’t know why you’d pay taxes at all. Last year, a couple of my relatives (I griped about it ad nauseum, trying to keep it pithy)only worked about, I think–5 months, if that. They were separated but did get a lot of welfare in the form of medicaid and food stamps. They got $10,000 from the government in the form of a tax refund. My husband and I, who both worked our butts off, had to pay an additional $5000 (can’t remember, it might have been 6 or 4 but it was ALOT of money.

I don’t believe poor people pay taxes at all. I don’t have a problem with them not paying taxes. I do have a problem with my having to pay additional thousands while they receive a handout from the government. It’s not right. And we’re not rich. We’re lower middle class, struggling to pay the bills just like everybody else. We underpaid, but I think we ended up paying a total of $10,000. Should have just written my relatives a check. (we screwed up on our w-4’s). Heck, this year, same people got back over $7000! By “back” I mean, got. We “only” had to pay $2300 this year. Well, don’t get me started.

I don’t pay taxes because I’m on disability right now. But, when I was working and earning 25,000 a year I still paid an exorbitant amount of taxes. I didn’t qualify for Earned Income credit(EIC), nor did a get a tax break because I don’t own a home. It really didn’t pay for me to do a lot of overtime, even when it was offered because I was taxed on the overtime and really wasn’t bringing home that much more income.

To answer your second question, yes, I have herd of John D web site, but, the issues I have with church are beyond that, mostly, because I believe that if I raise my hand to support leadership, they best earn that vote of confidence, and when my leadership allows me be verbally(not offended big difference), and emotionally abused and not stand up for me, they have no right to assume that I should support them.

I get leaders who suck. I get no longer believing in the gospel (I do, but I get how people can stop believing). I get how hard it is to go to church when you’ve been treated unfairly. I don’t get leaving the church. An asshole bishop doesn’t negate the first vision.

My rant about taxes wasn’t directed specifically to you. But there is an inequity in the way taxes are assessed.

Annegb- I can relate to your stories. The tax code really does need some work. Instead of always looking for more ways to extract taxes we (government) need to learn to be a little more efficient, less wasteful. Live with in our means. What a concept.
Diane- I’m sorry that my tone was disrespectful to you. My posts could have been better worded. Sorry to hear about your disability and I hope you get well soon. Best wishes, bb